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3 becomes profitable for the first time

The mobile operator 3 UK has achieved profitability for the first time in its eight-year history.Parent company Hutchison Whampoa released its 2010 results on Tuesday, showing that the 3 group of operators had, as a whole, become profitable for the first time.

The mobile operator 3 UK has achieved profitability for the first time in its eight-year history.

Parent company Hutchison Whampoa released its 2010 results on Tuesday, showing that the 3 group of operators had, as a whole, become profitable for the first time. While 3 networks in Sweden and Denmark have been profitable before, it is also the first time for the UK network. 3 Ireland was the only of the group's networks to be unprofitable in 2010.

Overall, the results (PDF) show 3 UK to have made earnings before interest and tax (EBIT) of £173m during 2010, representing a "turnaround" of 296 percent.

3 UK's newfound profitability is largely attributable to two factors: the operator's network-sharing joint venture with Everything Everywhere, which is called Mobile Broadband Network Limited (MBNL), and the fact that 3 started carrying the iPhone for the first time last year. 3's annual results reflect a one-off uplift from the value of the extra sites it gets to use thanks to the MBNL deal — this benefit is to the sum of HK$6,010m (£482m). Conversely, the company has also written off some network infrastructure kit, which offsets the benefit by HK$3,742m (£300m).

A spokesman for 3 told ZDNet UK on Wednesday that the operator's fortunes "went into hard reverse" in July 2010, when it started offering Apple's iPhone and launched the One Plan, a tariff with thousands of free call minutes. He noted that having the iPhone provides more benefits than simply selling iPhones.

"If you have a retail store that doesn't have an iPhone in the window, people are less likely to come in, not necessarily to buy an iPhone," 3's spokesman said, pointing out that many people came in when they saw the iPhone but went on to buy an Android handset instead.

According to 3's spokesman, 90 percent of the handsets sold by the operator are now smartphones.